Ergoresearch Ltd

Ergoresearch Ltd

February 11, 2014 16:36 ET

Ergoresearch Ltd. Announces Bought Deal for a Secondary Offering and Potential Treasury Offering by Way of Private Placement

Ergoresearch Ltd. Also Announces Certain Preliminary Q2 Financial Results

LAVAL, QUEBEC--(Marketwired - Feb. 11, 2014) - Ergoresearch Ltd. (TSX VENTURE:ERG) (the "Corporation" or "Ergoresearch") announced today that Danielle Boucher, La Société en Commandite Soccrent Nouvelles Technologies ("Soccrent") and the Corporation have entered into an agreement with an underwriting syndicate led by GMP Securities L.P. and which includes Laurentian Bank Securities Inc. (collectively the "Underwriters") to complete a secondary offering by way of private placement (the "Secondary Offering"). Under the agreement, the Underwriters have agreed to purchase an aggregate of 15,000,000 common shares at a price of $1.00 per share, for gross proceeds of $15,000,000. 12,100,000 common shares are being sold to the Underwriters by Danielle Boucher and 2,900,000 common shares are being sold to the Underwriters by Soccrent. Moreover, the Corporation has granted the Underwriters an option, exercisable prior to closing of the Secondary Offering, to purchase by way of private placement, up to 5,000,000 common shares from the Corporation at the same offering price for gross proceeds of up to $5,000,000 (the "Treasury Offering"). The transaction is expected to close on or about February 27, 2014. Closing is subject to a number of customary conditions, including receipt of all necessary regulatory approvals. The common shares purchased under the Secondary Offering and, if any, under the Treasury Offering, will be subject to a four month hold period.

Danielle Boucher currently holds 14,045,500 common shares of the Corporation, representing approximately 20.0 % of the issued and outstanding common shares. Following the closing of the offering, Danielle Boucher will hold 1,945,500 common shares. Soccrent currently holds 2,900,000 common shares of the Corporation, representing approximately 4.1 % of the issued and outstanding common shares. Following the closing of the offering, Soccrent will not be holding any common shares.

The net proceeds of the Secondary Offering will be paid directly to the selling shareholders. The Company will not receive any proceeds from the Secondary Offering. The proceeds from the Treasury Offering, if the Underwriters exercise their option, will be used for general and working capital purposes.

Preliminary Financial Results

In view of the contemplated offerings, Ergoresearch also wishes to announce certain preliminary financial results expected for its most recently quarterly period ended December 31, 2013. The Corporation expects to report revenues for the last quarter of $4,489,330, compared to $2,566,840 for the corresponding period in fiscal 2013 and normalized earnings before income taxes of $481,078, compared to $302,312 for the corresponding period in the previous fiscal year. Moreover, the Corporation expects to reach a normalized EBITDA for the last quarter of $861,472, compared to $365,941 for the corresponding period in the preceding fiscal year. Normalized earnings before income taxes and normalized EBITDA exclude a non-recurring expense incurred in connection with the Corporation's acquisition of Victhom, being certain professional fees in the amount of $115,137.

Non-GAAP Measures

This release refers to normalized EBITDA and normalized net earnings before income taxes which are non-GAAP financial measures. "EBITDA" is defined as earnings before interest, taxes, depreciation and amortisation. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. They should not be considered as substitute for, or superior to, measures of financial performance prepared in accordance with GAAP such as net earnings before taxes and net income. Management believes that normalized EBITDA and normalized net income before income taxes, which exlcude certain non-recurring items associated with its recent acquisition of Victhom, provide investors with a meaningful perspective on the current underlying performance of the Corporation's ongoing operations.

Forward-Looking Statements

This press release contains forward-looking statements, including statements regarding Ergoresearch's preliminary second quarter fiscal 2014 financial results, including anticipated revenues, net earnings before income taxes and normalized EBITDA. This preliminary unaudited financial information is based on Ergoresearch's current estimate of results from operations for the second quarter of fiscal 2014 and remains subject to change based on Ergoresearch's ongoing review of results, and the subsequent occurrence or identification of events prior to closing of the review and any further adjustments made in connection with closing and review procedures. Statements based on Ergoresearch's management's current expectations contain known and unknown inherent risks and uncertainties and no assurance can be given that potential future results or circumstances will be achieved or will occur. The reader should not place undue faith in forward-looking information. Management disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or circumstances.

About Ergoresearch

Ergoresearch has developed Quebec's leading network of orthotics clinics, with over 100 corporate and satellite centres under the Clinique du pied Équilibre, Orthoconcept, Podotech and Laboratoire Langelier banners. The leading manufacturer of "intelligent" foot orthotics and specialty orthotics, it is a trend-setter in creating durable medical equipment and software for the orthopedics market. Ergoresearch has developed and commercialized Expert-Fit™, the first robotized custom-fit orthotics manufacturing software program, launched the first Living Lab in Canada and more recently, a new generation of world -patented orthotic device called the OdrA, that revolutionizes the treatment of pain associated with knee osteoarthritis. Ergoresearch Ltd is listed on the TSX Venture Exchange (TSXV) under the symbol ERG.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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